summary about capital market

1. B Y : - S H R E Y A J A I S W A L ( 1 1 )
G U N J A N B H A T T ( 1 2 )
Capital Market

2. What is capital market ?
Capital markets are financial markets for the
buying and selling of long-term debt or equity-
backed securities. These markets channel the wealth
of savers to those who can put it to long-term
productive use, such as companies or governments
making long-term investments.

3. Significance of capital market
 Mobilization of savings
 Capital formation
 Provision of investment avenue
 Service provision
 Proper regulation of funds
 Speed up economic growth and development

4. Types of capital market
There are two types of capital market :-

5. Primary Capital Market
The primary market is the part of the capital
market that deals with issuing of new security
finance securities. Companies, governments or
public sector institutions can obtain funds through
the sale of a new stock or bond issues through
primary market. This is typically done through
an investment bank or finance syndicate of securities
dealers.

6. Features of Primary Capital Market
 This is the market for new long term equity capital. The primary
market is the market where the securities are sold for the first time.
Therefore it is also called the new issue market (NIM).
 In a primary issue, the securities are issued by the company directly
to investors.
 The company receives the money and issues new security
certificates to the investors.
 Primary issues are used by companies for the purpose of setting up
new business or for expanding or modernizing the existing business.
 The primary market performs the crucial function of facilitating
capital formation in the economy.
 The new issue market does not include certain other sources of new
long term external finance, such as loans from financial institutions.
Borrowers in the new issue market may be raising capital for
converting private capital into public capital; this is known as "going
public."

7. Secondary capital market
The secondary market, also called
the aftermarket, is the financial market in which
previously issued financial instruments such as
stock, bonds, options, and futures are bought and
sold.[1] Another frequent usage of "secondary
market" is to refer to loans which are sold by
a mortgage bank to investors such as Fannie
Mae and Freddie Mac.

8. Features of secondary capital market
 It credits liquidity
 It comes after primary market
 It has a particular place
 It encourage new investments.

9. Capital Market Instruments
some of the capital market instruments are:
• Equity
• Preference shares
• Debenture/ Bonds
• ADRs/ GDRs
• Derivatives

10. Capital market risk
1. one of the risks that should be considered is the
market risk that is the consequence of a general
decline in the stock market as a whole
2. credit risk, which concerns those who hold some
form of debenture.